US dol­lar rises on Fed rate hike spec­u­la­tion

THE dol­lar rose yes­ter­day in Asian trade on re­newed hopes for a pos­si­ble US rate hike this year fol­low­ing hawk­ish com­ments from the vice chair of the Fed­eral Reserve.

The green­back moved higher against ma­jor cur­ren­cies after Stan­ley Fis­cher said that the US cen­tral bank was close to meet­ing its tar­gets, out­lin­ing a bright out­look for the world’s largest econ­omy.

He ar­gued that core in­fla­tion was within “hail­ing dis­tance” of the bank’s 2 per­cent tar­get while em­ploy­ment had in­creased “im­pres­sively” since its low point in early 2010.

The com­ments cheered in­vestors, who are now shift­ing their fo­cus to Fed boss Janet Yellen’s speech this week in Jack­son Hole, Wy­oming, where global cen­tral bankers will con­gre­gate for an an­nual sym­po­sium.

“Talk­ing up the US dol­lar will be good for US fi­nan­cial stocks that would ben­e­fit from a rate rise and some of that pos­i­tiv­ity could spread over into fi­nan­cials glob­ally,” he said.

In Tokyo trade, the dol­lar bought 100.78 yen, ris­ing from 100.20 yen in New York.

Adding to yen weak­ness was an in­ter­view in the Sankei news­pa­per in which Bank of Ja­pan gov­er­nor Haruhiko Kuroda said there is “suf­fi­cient chance” it will ex­pand its mon­e­tary eas­ing after a meet­ing next month as the econ­omy stut­ters.

The two sets of com­ments high­lighted the di­ver­gence of mon­e­tary pol­icy in Ja­pan and the United States and pro­vided much-needed sup­port to the dol­lar, which last week fell be­low 100 yen. –

Photo: EPA

Money traders work be­low a dis­play show­ing the ex­change rate be­tween the US dol­lar and the Ja­panese yen in Tokyo yes­ter­day.